More than 70 per cent of Americans say big bonuses should be banned this year at Wall Street firms that took taxpayer bailouts, a Bloomberg National Poll shows.
An additional one in six favors slapping a 50 per cent tax on bonuses exceeding $400,000. Just 7 per cent of US adults say bonuses are an appropriate incentive reflecting Wall Street’s return to financial health.
A large majority also want to tax Wall Street profits to reduce the federal budget deficit. A levy on financial services firms is the top choice among more than a dozen deficit-cutting options presented to respondents.
With US unemployment at 9.8 per cent, resentment of bonuses and banking profits unites Americans across political, gender, age and income groups. Among Republicans, who generally are skeptical of business regulation, 76 per cent support a government ban on big bonuses to bailout recipients, that’s higher than backing among Democrats or independents.
JPMorgan Chase & Co Chairman and Chief Executive Officer Jamie Dimon got a bonus package for 2009 valued at $17 million and Goldman Sachs Group Inc’s Chairman and CEO Lloyd Blankfein received a $9 million all-stock bonus for last year, down from his Wall Street record $67.9 million in 2007.
“The American people bailed them out and immediately they went and paid their employees very large bonuses,” says poll respondent Michael Robertson, 43, of Wayne, Michigan. “I don’t believe they should have a bonus at all for a while.”
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Robertson lost his job in retail management in the auto parts industry three years ago when his company cut workers and is now in school studying computer electronics. Cash bonuses to securities industry employees in New York City grew 17 per cent, to $20.3 billion, for work in 2009, according to estimates in a report last month by the New York State Comptroller’s office. While the cash bonus pool for 2010 will probably be smaller, the average bonus may be bigger because after job losses the money will be divided among fewer employees, the report said.
As Wall Street managers prepare year-end compensation decisions, Morgan Stanley told employees at the sixth-largest US bank by assets to expect investment banking bonuses to decline 10 per cent to 30 per cent. The Council of Institutional Investors last month said that, among the six largest US banks, only New York-based Morgan Stanley and San Francisco- based Wells Fargo & Co have changed compensation practices to institute bonuses based on long-term performance.
US Senator Jim Webb, a Virginia Democrat, this year proposed a 50 per cent tax on bonuses of more than $400,000, though it failed to win backing from Congress or the Obama administration.
The $700 billion Troubled Asset Relief Program, enacted in October 2008 to prevent a collapse of the US financial system, provided money to shore up financial-services companies, including American International Group Inc Some recipients, such as Goldman Sachs and Bank of America Corp, have since repaid the money.
The Bloomberg poll of 1,000 adults 18 and older reflects continuing public animosity toward the bailouts, which became a potent political issue that helped defeat dozens of lawmakers from both parties in congressional elections this year.
The TARP program’s unpopularity lingers even after a Congressional Budget Office report last month said the program would wind up costing taxpayers about $25 billion, far less than initial estimates.
Seven of 10 Americans say it’s Wall Street’s turn to help bail out the government Treasury, supporting a tax on Wall Street profits as a way to reduce the $1.3 trillion deficit. By comparison, 43 per cent favor a freeze on spending for items like education and medical research, 33 per cent would cut farm subsidies, 25 per cent back a new tax on gasoline, and 15 per cent would reduce benefits in the Medicare health insurance program for the elderly.